Has the DoD policy on applying EVM to Firm-Fixed Price (FFP) contracts changed?
A. When the EVM policy was revised in March 2005, the Defense Acquisition Executive decided to retain the existing policy for FFP contracts based on the rationale that, if the risk warrants the need for EVM to manage, FFP may not be the appropriate contract type. Therefore, the use of EVM on FFP contracts continues to be limited to cases where the program manager believes there is significant schedule risk and/or concern about the impact of cost pressures on product or service quality. In these cases, the program manager should ask for a waiver from the program decision authority to implement EVM on individual FFP contracts. In addition, if a FFP contract is used for development or integration efforts valued at or greater than $20 million, the program manager is required by OMB (see next question) to use EVM and should request a waiver to do so. Such waiver requests must include a business case analysis that provides the rationale for why a cost or incentive contract was not an appropr
